During inflationary times, it can be difficult to know how your savings will be impacted. Matthew Henderson, an investment adviser at Charles Stanley – a UK investment management firm – offers six tips for avoiding the worst of the volatility.
1 Understand how inflation affects you
Henderson explains that inflation is an increase in prices over time, which erodes the spending power of cash – so could be bad news for your savings. As of July 2023, the annual Consumer Price Index inflation rate is 6.8%, meaning cash stashed under a mattress would have lost 6.8% of its purchasing power over the past year. However, it’s never simple. “Inflation isn’t uniform across all goods and services,” Henderson says. While blueberries have decreased by 2% over the past 12 months, the cost of a dozen eggs has gone up by a whopping 27%. “The extent to which you’re personally impacted by inflation depends on your own spending preferences, to a degree.”
